Malone v. Nelson

Bill to effectuate statutory right of redemption.

It appears from the averments of the bill that Mrs. Daisy W. Malone, and her husband, W. W. Malone, executed a mortgage on January 1, 1924, on certain lands in Limestone county to the First Joint Stock Land Bank, of Montgomery, to secure an indebtedness of $8,000; that the said Daisy W. Malone made default in the payment of certain installments, and the said First Joint Stock Land Bank did, on June 28, 1932, after said defaults occurred, foreclose said mortgage under the power of sale contained therein, and at the foreclosure sale the mortgagee purchased the property for the sum of $6,500, and a deed was duly executed to it on its purchase.

The bill shows that the foreclosure was in all respects regular, and was sufficient to cut off the equity of redemption of the mortgagors.

It further appears from the averments of the bill that on the 30th day of August, 1932, the said First Joint Stock Land Bank, purchaser at the foreclosure sale, sold and conveyed the property to Sophie Nelson, Luella H. Bowen, and Lu Ellen Schram Woodroof, three of the respondents, at and for the sum of $4,250.

On June 12, 1934, the complainant, a son of Mrs. Daisy W. Malone, desiring to redeem the property, made written demand upon all the respondents for a statement in writing of the debt and all lawful charges claimed by them, in all respects as provided by section 10144 of the Code.

The penultimate paragraph of the demand reads: "The reason the notice is given to George Rudder is because I have heard that he bought or contracted to buy said place or a part thereof but there is no deed on record showing any such transaction."

To this demand, on June 20, 1934, Thomas S. Woodroof, as attorney for all the respondents, including the said Rudder, replied, and furnished complainant a written itemized statement of the debt and lawful charges claimed by the respondents to be due and payable in order to effectuate redemption.

The said W. W. Malone, Jr., not being satisfied with, but disputing, the correctness of the claimed amounts, both as to the debt and the value of the permanent improvements, as well as other items claimed as lawful charges, filed this bill against the respondents (including Rudder), seeking a judicial ascertainment of the debt and all lawful charges, offering to pay the same, and praying to be allowed to redeem the property on payment of the amount the court might find to be due and owing.

Complainant is a child of Mrs. Malone, the mortgagor-owner of the property, and it is in his right as such child, that he asserts the statutory right of redemption. Section 10140, Code. He has such right.

As we now view Braly v. Polhill (Ala. Sup.) 166 So. 419,¹ it failed to properly interpret the statute, and to give due emphasis to the change made by the interpolation of the word "child." Said case is modified in so far as it holds that a child of the mortgagor, to redeem, must show an interest in the property at the time of the foreclosure.

The sufficiency of the bill is not questioned.

The respondents, separately and severally, answered the bill. In their answer, the respondents aver and state that the property was conveyed to the said Sophie Nelson, Luella H. Bowen, and Lu Ellen Schram Woodroof jointly by the said First Joint Stock Land Bank, after the foreclosure had taken place. The deed of conveyance does not appear in the evidence, but the bill avers that one was executed by the First Joint Stock Land Bank to the three named purchasers.

From their answer it appears that the said three named purchasers, in October, 1932, and after their acquisition of the property, entered into what they termed a rent and sale contract with the respondent George Rudder, by the terms of which, upon the payment by Rudder of certain yearly installments, ending on January 1, 1943, the said purchasers agreed to convey the property to said Rudder. Rudder went into possession of the property under this contract and was in possession of it at the time of the filing of the bill, and at the time the decree was entered in the cause. The legal title to the property still remained, however, in the respondents Nelson, Bowen, and Woodroof.

In their answer, the respondents Nelson, Bowen, and Woodroof claimed and asserted "that at the time they purchased the property from the First Joint Stock Land Bank, and as a part of the consideration for the transaction, the balance due on the debt by the mortgagor, Daisy W. Malone, to the First Joint Stock Land Bank of Montgomery, was duly transferred" to them, and that they were and are owners of said balance due on the mortgage debt, and that the rent sale contract made with Rudder was made subject to the right of redemption.

From the evidence noted on the submission of the cause, it appears that the original indebtedness of Mrs. Malone to the First Joint Stock Land Bank was $8,000, bearing 6 per cent. interest, payable semi-annually; that on account of her default in payment of the indebtedness, the mortgagee foreclosed the mortgage on June 28, 1931; that the mortgagee purchased the property at and for the sum of $6,500; that prior to the foreclosure, the mortgagee, in order to redeem the property from the sale for taxes due the state and county, paid the state and county the taxes, the amount being $351.62; that thereafter state and county taxes were paid on the property for the years 1932 and 1933, amounting in the aggregate to $168.65.

From the evidence, it abundantly appears that the First Joint Stock Land Bank, as a part of the consideration of the transaction, obligated itself, by contract in writing, to transfer to the purchasers the balance of the unpaid mortgage indebtedness, and this it did, evidencing said act either by a transfer of the note secured by the mortgage, or by a delivery of the same to the purchasers.

One of the insistences here made is that the court erred in holding that the purchasers, Nelson, Bowen, and Woodroof, acquired the note evidencing the indebtedness by a proper transfer from the mortgagee; that Bowman, the president of said bank, was not shown to have authority to make the transfer. There is no merit in this contention. The contract provided that the balance of the debt was to be transferred to the purchaser. The deed was executed by the corporation-mortgagee pursuant to the contract, and the note evidencing the indebtedness was duly delivered to the purchasers, and it is of no moment, in this suit, whether the note was or was not transferred in such way as to carry the legal title. The delivery of the note, pursuant to the contract agreement, to the purchasers was sufficient to carry the equitable title to the purchasers, and to make it their property as to any balance due thereon. First National Bank v. Murphree, 218 Ala. 221,118 So. 404; Strickland Co. v. Lesesne Ladd, 160 Ala. 213,49 So. 233; McDonald v. McDonald, 215 Ala. 179, 110 So. 291; Lee v. Wimberly, 102 Ala. 539, 15 So. 444; Tison v. Citizens' Bank Security Co., 208 Ala. 111, 93 So. 857.

The balance of the indebtedness remaining unpaid from the proceeds of the foreclosure sale, with interest thereon at 8 per cent., was properly allowed the purchasers Nelson, Bowen, and Woodroof.

It is also insisted that, inasmuch as the mortgage was not introduced in evidence, it did not, therefore, appear that the mortgagee had any authority to pay the taxes, and to include the amount in the mortgage indebtedness. The answer as to this is, the mortgagor, upon whom rested the primary duty to pay the taxes, had permitted the property to be sold for the payment of the State and county taxes, and the mortgagee was forced to pay the same to prevent the loss of the property, both to the mortgagor and mortgagee. In such circumstances it would be extremely inequitable to hold that the mortgagee would not be permitted to enforce the claim accruing to him on such payment against the property. In such circumstances, the mortgagee, in the enforcement of his equitable rights, would at least be subrogated to the lien of the state and county.

Confessedly, the taxes were a lien upon the property, and the mortgagee had the right to redeem the land to protect his own property, and is entitled to reimbursement from the proceeds of the sale of the mortgaged property. Red Mountain Mining Co. v. Jefferson County Savings Bank, 113 Ala. 629, 21 So. 74, 59 Am.St.Rep. 151; Shook v. Benson et al., 214 Ala. 338,107 So. 832; Clermont-Minneola Country Club, Inc., v. Percy T. Coupland et al., 106 Fla. 111, 143 So. 133, 84 A.L.R. 1354.

The court committed no error in allowing the item of $351.62, as a part of the indebtedness due the mortgagee, and which represented the amount expended by the mortgagee in redeeming the property from the tax sale. Nor was there any error in allowing the items representing taxes paid on the property becoming due after the foreclosure.

These taxes, with interest thereon, were properly included in the amount required to redeem the property.

We do not see that any attorney's fee was actually included in the indebtedness, but if it was, the same was fully covered by the note. Kelly v. Carmichael et al., 221 Ala. 371,129 So. 81.

There is no merit in appellant's contention that it was not shown that the note offered in evidence was the note given by Mrs. Malone, and which was secured by the mortgage.

We find no error in that part of the decree fixing the amount due to be paid to the respondents, Nelson, Bowen, and Woodroof, on redemption.

This brings us to a consideration of the propriety of the decree allowing the respondent Rudder the $665.50, or any sum, for permanent improvements made on the property after he went into possession of it on his contract of purchase from Mistresses Nelson, Bowen, and Woodroof.

Appellant's insistence is that the statutory provisions relating to permanent improvements has reference to only such improvements as the holder of the legal title may have made, and that the statute does not include or provide for permanent improvements made by one who is in possession under a contract of purchase.

There was a time when the appellant's contention reflected the views of the court. Morrison v. Formby, 191 Ala. 104,67 So. 668, 669.

The decision in the Morrison Case, supra, was decided at a time when section 5757 of the Code of 1907 was the law of the case. This section (omitting the part not bearing upon the question now under considerations) reads: "Any person offering to redeem must pay to the person in possession the value of all permanent improvements made by him after he acquired title."

In the Morrison Case, supra, it was observed: "The established foundation, on redemption, for the right to compensation for permanent improvements is title, meaning necessarily the repository of the legal title. Such is the principle underlying the analogy present in rulings made in the administration of section 5749." And the court held in that case that permanent improvements made by one in possession under a contract to purchase was not entitled to be reimbursed for the value of such improvements. The holding was made upon the ground that such a person had not the legal title, the element and essence of property right to which redemption must be referred for effectual operation.

However, since the rendition of the decision in the Morrison Case, supra, section 5757 of the Code of 1907 has undergone a change. Section 10153 of the Code of 1923, corresponding to section 5757 of the Code of 1907, in so far as here pertinent reads: "Any person offering to redeem must pay to the then holder of the legal title the value of all permanent improvements made on the land since the foreclosure sale, and if the holder of the legal title cannot be ascertained, payment may be made to the circuit court of the county having jurisdiction of the subject matter when bill is filed to redeem."

It will thus be seen that section 5757 restricts recovery for permanent improvements to such improvements as may have been made by the person in possession after he acquired the title. The statute, ex vi termini, limits recovery for improvements as were made by the holder of the legal title.

Section 10153 does not limit the improvements for which the redemptioner must pay to those improvements which were made by the holder of the legal title, but authorizes recovery by the holder of the legal title for permanent improvements made onthe land since the foreclosure. This, of course, contemplates, as pointed out in the case of Ewing v. First Nat. Bank of Montgomery, 227 Ala. 46, 148 So. 836, that the permanent improvements must be made on the land by one who connects himself with the holder of the legal title, as a purchaser, whether under an executed deed of conveyance, or under a contract of purchase, from the purchaser at the foreclosure sale, or from some one succeeding to such legal title.

We think the amendment of the statute was intended, in fact, to limit the effect of the decision in the Morrison Case, supra.

It is to be noted that in the contract of respondent Rudder with respondents Nelson, Bowen, and Woodroof, it was stipulated: "In the event said above described land is redeemed the parties of the first part (Nelson, Bowen and Woodroof) agree to pay the party of the second part for the necessary improvements placed on said premises by the party of the second part."

This provision was authority from the holders of the legal title to Rudder to make needed permanent improvements on the place, to have effect as if made by the holder of the legal title under their purchase at the foreclosure sale.

We are of the opinion that the court committed no error in finding that Rudder, after he entered into possession of the property under his contract of purchase, made permanent improvements; that such improvements were needed, and reasonable, and permanent; and we are further of the opinion that the court committed no error in fixing the value of the permanent improvements at $665.60.

It follows that the decree of the circuit court is due to be affirmed, and it is so ordered.

Affirmed.

ANDERSON, C. J., and THOMAS, BOULDIN, and FOSTER, JJ., concur.

GARDNER and BROWN, JJ., concur specially.

¹ 231 Ala. 633.